Anheuser-Busch InBev has reported that its global volume sales declined 9.3% in its first-quarter results, however, April figures suggest that Covid-19 impact will be greater in its second quarter.
Growth of AB InBev’s three global brands – Budweiser, Stella Artois and Corona – across the majority of its markets was more than offset by declines in China, which is the largest market for both Budweiser and Corona outside of their home markets.
Excluding China, volumes declined by 3.6%, despite initial growth of 1.9% in January and February. The firm said that the impact of Covid-19 on its results increased significantly towards the end of the quarter due to shortfall from lost sales from bars and restaurants.
In Africa excluding South Africa, we delivered high single-digit volume growth in Nigeria. With respect to COVID-19, measures being taken in Nigeria vary state by state, though most major states have mandated a lockdown. We delivered volume growth in Mozambique, Zambia and Uganda, while volumes were lower in Tanzania.
Measures taken to combat the COVID-19 pandemic vary by country, but implementation generally began in late March and early April to shut down the on-premise channel in most markets. Our breweries mostly remain operational and we are servicing the market, primarily the off-premise channel, in compliance with government regulations.
- Revenue: Revenue declined by 5.8%, materially impacted by lower volumes resulting from the COVID19 pandemic. Revenue per hl grew by 3.9%, driven by ongoing premiumization and revenue management initiatives.
- Volume: Total volumes declined by 9.3%, with own beer volumes down 10.5% and non-beer volumes down 0.2%. Excluding China, our volumes declined by 3.6% in 1Q20 despite initial growth of 1.9% in January and February.
- Global Brands: Combined revenues of our three global brands, Budweiser, Stella Artois and Corona, declined by 11.0% globally and by 17.5% outside of their respective home markets. Growth across the majority of our markets was more than offset by declines in China, which is the largest market for both Budweiser and Corona outside of their respective home markets.
- Cost of Sales (CoS): CoS was flat in 1Q20 and increased by 10.3% on a per hl basis, driven primarily by operational deleverage resulting from the impact of COVID-19 on our volumes and transactional currency headwinds.
- EBITDA: EBITDA of 3 949 million USD represents a decrease of 13.7% in the quarter, with EBITDA margin contraction of 331 bps to 35.9%.
- Net finance results: Net finance costs (excluding non-recurring net finance results) were 3 160 million USD in 1Q20 compared to 366 million USD in 1Q19. The increase was predominantly due to a mark-to-market loss of 1 855 million USD in 1Q20 linked to the hedging of our share-based payment programs, compared to a gain of 951 million USD in 1Q19, resulting in a swing of 2 806 million USD.
- Income taxes: Normalized effective tax rate (ETR) decreased to -109.3% in 1Q20 from 19.6% in 1Q19, impacted by non-deductible mark-to-market losses linked to the hedging of our share-based payment programs. Excluding the mark-to-market impact linked to the hedging of our share-based payment programs, our normalized ETR was 25.9% in 1Q20 as compared to 27.5% in 1Q19.
- Profit: Normalized profit attributable to equity holders of AB InBev was -845 million USD in 1Q20 versus 2 395 million USD in 1Q19. Underlying profit (normalized profit attributable to equity holders of AB InBev excluding mark-to-market losses linked to the hedging of our share-based payment programs and the impact of hyperinflation) was 1 015 million USD in 1Q20 as compared to 1 449 million USD in 1Q19.
- Earnings per share (EPS): Normalized EPS in 1Q20 was -0.42 USD, a decrease from 1.21 USD in 1Q19, negatively impacted by a lower profit and mark-to-market losses linked to the hedging of our share-based payment programs. Underlying EPS (normalized EPS excluding mark-to-market losses linked to the hedging of our share-based payment programs and the impact of hyperinflation) was 0.51 USD in 1Q20, a decrease from 0.73 USD in 1Q19.